The Inspector-General of Taxation and Taxation Ombudsman (IGTO), Karen Payne today released her latest report, which looks at the results of her investigations into the ATO’s administration of JobKeeper enrolment deferral decisions (JobKeeper enrolment deferral).
“Applying the test of what is ‘fair and reasonable’ is vitally important to provide community confidence in the consistency of outcomes for taxpayers,” said Ms Payne. “This is one of the key conclusions highlighted in the latest IGTO report.”
The report is a summary of the IGTO’s investigations into a body of complaints from taxpayers who requested a deferred enrolment in JobKeeper but were rejected by the Australian Taxation Office (ATO).
Ms Payne noted that JobKeeper enrolment deferrals allow JobKeeper applicants to enrol for JobKeeper retrospectively in certain circumstances[1]Section 388-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953); and the Commissioner of Taxation’s instructions to ATO staff, practice statement PS LA 2011/15 Lodgment obligations, … Continue reading and are an important part of the economic support package for all Australian taxpayers during the COVID pandemic from mid 2020.
“Essentially, ATO decisions on JobKeeper enrolment deferral requests should be made in a manner that is consistent with the Commissioner’s instructions to ATO staff – which is set out in practice statement PS LA 2011/15. ATO staff have been required to follow this practice statement since 2011,” she said.
Tax Complaint Investigations
The IGTO has investigated at least 20 taxation complaints (to date). Initially (up until around April 2021), the IGTO investigations did not observe the ATO applying the ‘fair and reasonable threshold’, as set out in the Commissioner of Taxation’s own instructions to staff[2]PS LA 2011/15.. “This is contrary to ATO instructions which have applied since 2011 in ALL ATO deferral decisions,” said Ms Payne.
An overview of the issues covered is set out in Table 1 (below) to illustrate some of the facts involved in the IGTO’s investigations.
Key Findings of IGTO investigations into JobKeeper deferrals
The IGTO investigations observed that the ATO:
- only granted lodgement deferral of JobKeeper enrolments where there were exceptional circumstances which matched one of the circumstances on a list of ATO-specified circumstances;
- did not apply the fair and reasonable threshold, despite this threshold being set out in the Commissioner’s instructions to ATO staff (PS LA 2011/15);
- did not consider the particular facts and circumstances of each case to determine whether lodgement deferral was appropriate; and
- disseminated guidance materials to staff, including Practice Note 2020/002 and scripting for frontline staff, which confined JobKeeper enrolment deferral approvals to only those cases with circumstances that matched those on an ATO-specified list of circumstances
- did not allow staff to refer requests to a more senior decision-maker unless the officer considered that the case may fall within that ATO-specified list.
- Improved decision making post April 2021.
The IGTO noted that the ATO changed its decision in a number of JobKeeper enrolment deferrals as a result of the IGTO complaint investigations which identified that the ATO should apply a ‘fair and reasonable’ test.
Key improvements and outcomes
Since more focused application of the ‘fair and reasonable’ test, the ATO has
- overturned its initial decisions in a number of JobKeeper enrolment deferral requests by applying a ‘fair and reasonable’ test, in response to IGTO investigations; and
- advised the IGTO in writing and verbally that it is the ‘fair and reasonable threshold’ that should be applied and clarified that the list of ATO-specified circumstances only provide a basis for ATO officers to automatically grant JobKeeper enrolment deferrals
IGTO objective – consistent treatment for all taxpayers
Karen Payne highlighted the point that these investigations and the report reinforce the IGTO’s commitment to ensure consistent treatment of all taxpayers. “It’s important that taxpayers and their advisers who requested and have been denied JobKeeper enrolment deferrals should consider if the ATO applied the ‘fair and reasonable threshold’ to their circumstances — in other words, consistent with the Commissioner’s staff instructions in PS LA 2011/15,” she said.
“Part of our mandate is to identify places in the system where the rules are not being correctly applied or communications need to be examined and improved. These are just some of the benefits an independent agency like the IGTO can bring to Australian taxpayers and our society and economy.”
She emphasised that any taxpayer who had concerns in the area of JobKeeper deferrals should contact either ASBFEO or their professional organisation to follow this up in the first instance, including:
| Organisation | Contact Information | Phone Enquiries |
|---|---|---|
| ASBFEO – Australian Small Business and Family Enterprise Ombudsman | www.asbfeo.gov.au/contact-us | 1300 650 460 |
| Certified Practising Accountants | www.cpaaustralia.com.au/contact-us | 1300 73 73 73 |
| Chartered Accountants in Australia and New Zealand | [email protected] | 1300 137 322 |
| Institute of Public Accountants | www.publicaccountants.org.au/about/contact-us | (03) 8665 3100 |
| The Tax Institute | www.taxinstitute.com.au/footer/contact-us | 1300 829 338 |
About the report
A copy of the report can be found here.
For further information – Contact
Marjorie Johnston – Wordmakers
Mobile: 0407 329 430
About the IGTO
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) is an independent, Commonwealth statutory agency, established in 2003. The Taxation Ombudsman function was transferred to the IGTO in 2015. The IGTO provides an important safety net service in the tax system. Independent investigation of taxpayer complaints enhances community confidence in the fairness of the tax system and provides assurance to taxpayers in the fairness of their outcomes. This helps to enhance voluntary compliance. The IGTO also provides independent advice and assurance to Government on the taxation administration laws and systems. Since 2015, the IGTO has performed dual roles, which complement each other:
- The Taxation Ombudsman provides independent assistance and assurance directly to taxpayers and tax professionals and investigates taxation complaints about the actions and decisions of the Australian Taxation Office (ATO) or the Tax Practitioners Board (TPB). The Taxation Ombudsman, also conducts investigations of actions that have broader community impact or are commonly observed in a number of complaints to identify wider system improvements that address the causal issues.
- The Inspector-General of Taxation undertakes investigations of actions, systems and taxation laws (to the extent they deal with tax administration matters).
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Table 1 – A Summary of issues raised through taxation complaint investigations
| 1 | 2 | 3 |
| Outline of the case | ATO Initial Response | ATO response to IGTO Investigation |
| Case 1* | ||
| The complainant, who is legally blind, mistakenly applied for JobSeeker payments through Centrelink | The ATO did not grant lodgement deferral of the enrolment notice because his circumstances did not fall within one of the ATO-specified circumstances. | The ATO upheld its initial decision and did not allow lodgement deferral because it considered that there were no exceptional or unforeseen circumstances (pre April 2021).* |
| Case 2* | ||
| The tax agent advised that the JobKeeper enrolment notification had been delayed due to the serious illness of a family member and staff shortages. | The ATO did not grant lodgement deferral of the enrolment notice because the tax agent’s circumstances did not fall within one the ATO-specified circumstances. | The ATO upheld its initial decision and did not allow lodgement deferral because it considered that there were no exceptional or unforeseen circumstances (pre April 2021).* |
| Case 3 | ||
| The complainant was a small business with no employees and an 81-year old eligible business participant, who operated a travel agency with his elderly wife. He was not aware that JobKeeper payments were available to businesses without employees until advised by his bookkeeper in July 2020 and the deferral request was made in the following days. | The ATO did not grant lodgement deferral of the enrolment notice because the business’ circumstances did not fall within one of the ATO-specified circumstances. | The ATO reversed its initial decision and granted lodgement deferral because it considered it was fair and reasonable to do so, in accordance with PS LA 2011/15. |
| Case 4 | ||
| The complainant was overseas, caring for a sick relative, when the JobKeeper scheme was introduced. Due to border restrictions he was unable to return until October 2020 and then had to complete hotel quarantine. The lodgment deferral request was made once he completed hotel quarantine. | The ATO did not grant lodgement deferral of the enrolment notice because his circumstances did not fall within one the ATO-specified circumstances. | The ATO reversed its initial decision and granted lodgement deferral because it considered it was fair and reasonable to do so, in accordance with PS LA 2011/15. |
| Case 5 | ||
| The complainant was overseas when the JobKeeper scheme was introduced and only returned to Australia after trying 4 times to do so, with 3 of his flights having being cancelled due to the pandemic. He was not aware of his eligibility for JobKeeper until his return to Australia. | The ATO did not allow lodgement deferral of the enrolment notice because his circumstances did not fall within one of the ATO-specified circumstances. | The ATO reversed its initial decision and granted lodgement deferral because it considered it was fair and reasonable to do so, in accordance with PS LA 2011/15. |
| Case 6 | ||
| The complainant (a company) engaged a tax agent to enrol the company for JobKeeper and was advised by the tax agent that they had been enrolled within time – but this was false. The enrolment was not processed by the tax agent until August 2020. | The ATO did not allow lodgement deferral of the enrolment notice because the business’ circumstances did not fall within one of the ATO-specified circumstances. | The ATO reversed its initial decision and granted lodgement deferral because it was fair and reasonable to do so, in accordance with PS LA 2011/15. |
*Please note that the IGTO is in the process of contacting complainants who had raised complaints before April 2021 and who may benefit from the ATO reconsidering whether the fair and reasonable threshold had been correctly applied in their case (for example – Cases 1 and 2).